Inside Wrapp’s Social Gift Card Service

Friends who say a birthday greeting on Facebook isn’t worth much should prepare to get out their wallets. A new gift card platform called Wrapp aims to make social gifting more “like sitting around the Christmas tree,” said Wrapp CEO and co-founder Hjalmar Winbladh via phone.

Launched today in the U.S., the app combines birthday and event reminders on Facebook with free gift cards from 25 major retailers that recipients can spend in brick-and-mortar as well as online stores without having to print out a voucher.

When someone in your network is having a birthday, graduation, or other event, the app will not only send you a reminder, it will also pull your friend’s bio data – like age, gender, and location – to suggest a targeted list of retailers that match your friend’s demographic, like Gap or H&M. (There’s even an algorithm to find people who keep their ages private on Facebook.)

Sometimes the retail partners will offer freebies, like a $5 gift card, that you can post to your friend’s wall for free. Of course, the retailers are hoping you’ll add more money to the balance. So far, Wrapp users are spending an average of four to six times the value of the free gift cards they receive from the merchants.

Friends can post the gift cards on their Facebook walls and invite other friends to contribute. In this way, Wrapp becomes a “customer acquisition tool and not just a gift card platform,” said Winbladh, because the customer does the advertising rather than the marketers.

Because the social network connects people who don’t necessarily spend a lot of time together in the real world, Wrapp’s customers often send gift cards with messages like “thank you,” “I miss you,” and “looking forward to seeing you soon.”

Ninety percent of Wrapp’s customers choose to post the gift cards on their recipients’ walls rather than sending an email. “The reason why people are sharing them on Facebook is that it’s fun to give and it’s fun to receive,” explained Winbladh, “but it’s even more fun to give if you can show to all of your friends that you’re a nice guy.”

Since the app launched in Sweden four months ago, 165,000 people (out of about 9 million in Sweden) have sent 1.4 million gifts to their Facebook friends from nearly 60 major retailers in Europe. Wrapp has also launched in the U.K. and Norway, with offices in Australia, Japan, the Netherlands, Taiwan, France, Germany, and Turkey.

Here in the U.S., the gift card market totals more than $100 billion. Wrapp users can send gift cards for clothing at Gap, H&M, WeSC, Björn Borg, and Brooklyn Industries; designer deals at Fab, spa treatments at SpaFinder Wellness, beauty supplies at Sephora, furniture and cooking supplies at Wayfair, and subscriptions to the Wall Street Journal.

The company’s founders are serial entrepreneurs with backgrounds in both social media and retail: COO Carl Fritjofsson was a strategy advisor to Groupon.se and CTO Andreas Ehn was Spotify’s first chief technology officer. Winbladh previously co-founded a mobile software company in Sweden called Sendit, which was acquired by Microsoft in 1999. Wrapp’s chairman, Fabian Månsson, is the former CEO of H&M and Eddie Bauer. In January, the company raised $10.5 million in Series A funding from Greylock Partners and Atomico.

With LinkedIn founder Reid Hoffman on the board of directors (along with Skype founder Niklas Zennström), it shouldn’t be long before Wrapp extends its service to corporate gifting on the professional network, but for now, said Winbladh, “Facebook is pretty dominant and it’s a good place to start.”